Buck up, UK.gov. You need to get a grip on failing shared services centres - PAC

Promise to save £600m per year was all talk and no trousers

MPs have urged the Cabinet Office to get a grip on its embarrassing efforts to consolidate departments' back offices into two privately owned shared services centres.

Moves to shift departments' back office servers and ERP systems were announced to much fanfare four years ago - but have yet to save the government any cash despite being touted as a way to cut up to £600m per annum.

In a report today, the Public Accounts Committee said ongoing failures of leadership and governance must be addressed urgently if the shared service centres are to deliver expected savings to the public purse.

Earlier this year the National Audit Office found that the centres have only delivered £90m in "savings" in the first two and a half years of operation - but at a cost of £94m.

The Cabinet Office now estimates that the centres will deliver savings of around £484m in total by 2023-24, which the PAC said "compares unfavourably" with the anticipated £300m to £400m a year savings set out in the Next Generation SharedServices Strategy in 2012, said the PAC.

Meg Hillier MP, chair of the PAC, said today: “The government set out to save money with this programme but it launched with critical flaws Whitehall then failed to address. Each department was able to request multiple changes which led to big cost increases.

“The result has been a net cost to taxpayers and a significant scaling back of ambition for the savings likely to be achieved in the years ahead. If government is serious about making a success of shared services, and indeed future projects running across departments, it must act on the serious concerns set out in our Report before any more public money is wasted.”

The failure at the outset to set up effective governance has had long-term consequences for the programme, it noted.

Suppliers had only managed to transfer two of the 26 organisations onto the single operating platforms by April 2016.

It said the Cabinet Office, once it had decided not to make it compulsory for departments to join the programme, did not secure sufficient buy-in from departments.

"The lack of commitment to the overall programme by some departments is, in part, because they had assessed that any benefits from participating in the programme would only be marginal.

"They had not been persuaded by the argument that remaining in the programme would generate benefits for the whole of government. Without the appropriate leadership and governance structures in place, there was nothing preventing them from leaving the programme."

The Register has previously revealed a number of departments that have dropped out of the centres entirely, after they decided they were not commercially viable.

For example, the former department for Business, Innovation and Skills sank £14m in consolidating its legacy kit as part of a cross-government shared services plan that it later pulled out of.

Nevertheless, the Met has decided to outsource its in-house back office to one of the centres run by Steria - a move that has also been described as "high risk".

The report recommended that the Cabinet Office demonstrate how it has learnt from its previous experience and set out what steps it will take to make sure it has, by March 2017, effective leadership and sufficient expertise in place.®